Agricultural income treatment of aloe fibre operations: processing remained part of cultivation and was exempt from tax.

Profits from cultivating aloe plants and preparing sisal fibre were treated as agricultural income because the statutory concept of agricultural income includes processes ordinarily employed by a cultivator to make produce fit for market. On the facts, aloe fibre cultivation was not shown to exist as an established commercial activity apart from the assessee's own operations, and there was no real open market for aloe leaves. The Revenue's reliance on jail manufacture was rejected as not reflecting an ordinary cultivator's process or a true market standard. The fibre-preparation activity was therefore regarded as part of the agricultural operation itself, and the resulting profit was exempt from tax.

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Issues: Whether the profits derived from cultivating aloe plants and manufacturing sisal fibre from the leaves were taxable as business income, or exempt as agricultural income.

Analysis: The statutory definition of agricultural income extended beyond mere removal of the crop from the land and included processes ordinarily employed by a cultivator to render produce fit to be taken to market. The evidence showed that, in the prevailing conditions, there was no established cultivation of aloe for fibre apart from the assessee's own operations, and no real open market for aloe leaves. The only comparator relied on by the Revenue was jail manufacture, which was held not to represent an ordinary cultivator's process or a true market standard. On those facts, the assessee's process of preparing sisal fibre was treated as part of the agricultural activity itself rather than as a separate manufacturing venture.

Conclusion: The entire profit from the sisal fibre operations was held to be agricultural income and therefore exempt from taxation.

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